A formal analysis of inconsistent decisions in intertemporal choice through subjective time perception.

The framework of this paper is subjective time perception in the context of intertemporal choice, that is to say, the process of making decisions on dated outcomes (monetary or not) by an individual or a group of individuals. In this setting, the Discounted Utility model and, more specifically, the exponential discounting have been the paradigmatic methodology used to measure the preferences on delayed outcomes. However, this model can only be applied to consistent choices in which individuals do not change their preferences when the involved rewards are delayed the same time interval. Unfortunately, this is not the case of several decision scenarios where time is viewed as a subjective variable. The objective of this paper is to formally analyze the consistency of intertemporal choices governed by a discount function, derived from the exponential, where time has been distorted according to certain psychological traits of the subjects involved in the decision-making. More specifically, the different types of decreasing impatience will be characterized by focusing on the distortion derived from the subjective perspective of time. The findings of this research are very relevant in order to explain the time-related behavior of decision-makers in some noteworthy fields such as finance, psychology, marketing or sociology.

A socioeconomic approach to the profile of microcredit holders from the Hispanic minority in the USA.

The subject of this study is the microcredit market in the USA, more specifically in Florida. The justification for choosing this specific state is the massive presence of the Hispanic population. This will facilitate a generalization of the obtained results to the microcredit market in Latin American countries. Thus, the objective of this study is to analyze the profile of microcredit holders and their companies from socioeconomic and financial points of view. As our data also consider the degree of repayment of the microloans included in the sample, the clients' profile is related to the punctuality or default of their corresponding loan repayments using the methodology of multinomial logit regression. The variables used in this study refer to personal information concerning borrowers (gender, age, education level, and marital status), the economic situation of their respective companies (closeness to the lender, number of workers, and revenues), and the characteristics of granted loans (principal, term, and purpose). However, the results of the regression show that only two variables are significant at the 5% significance level: the borrower's age, which has a positive effect on repayment punctuality, and the loan term, which exhibits a negative effect. The findings of this study have clear implications, as they can help lenders design suitable microloans adjusted to customer profiles. Finally, future research should include other demographics and characteristics of affected companies.

The improving sequence effect on monetary sequences.

Experimental studies reveal a preference for improving income sequences, challenging the axioms of the discounted utility model, such as the present value maximization principle. Through an experiment, we test the existence of this anomaly on short and long-term income sequences, by confirming previous experimental evidence. Although the participants are aware of the present value maximization, they select improving sequences of income mainly to cover their future spending needs, to feel motivation at work, and to receive a signal of success and status. In order to include this sequence effect in a mathematical valuation model, we propose an alternative model to value sequences which outperforms the traditional discounting model by fitting the present value with the preferences of the participants.

The Relative Importance of Globalization and Public Expenditure on Life Expectancy in Europe: An Approach Based on MARS Methodology.

BACKGROUND: There has been a widespread debate about the overall impact of globalization on population, not just economically, but also in terms of health status. Moreover, the current health crisis is going to force governments to review the structure of the public budget to most effectively alleviate the negative economic and health effects on the population. OBJECTIVE: The aim of this paper is to analyze the relative importance of globalization and the public budget composition-specifically the participation of public expenditure on healthcare, social services and environment in gross domestic product (GDP)-on life expectancy at birth in European countries during the period 1995-2017. METHODS: The Multivariate Adaptive Regression Splines (MARS) methodology was applied to analyze the socioeconomic determinants of life expectancy at birth. RESULTS: Our findings show that globalization has no relative importance as an explanatory variable of life expectancy in European countries, while government expenditure on social protection is the most relevant followed by public expenditure on health, gross national income per capita, education level of the population and public expenditure on environmental protection. CONCLUSION: European strategies intended to impact on health outcome should spend more attention to the composition of public budget.

An empirical approach to the "Trump Effect" on US financial markets with causal-impact Bayesian analysis.

In this paper, we have tested the existence of a causal relationship between the arrival of the 45th presidency of United States and the performance of American stock markets by using a relatively novel methodology, namely the causal-impact Bayesian approach. In effect, we have found strong causal relationships which, in addition to satisfying the classical Granger Causality linear test, have been quantified in absolute and relative terms. Our findings should be included in the context of one of the main markets anomalies, the so-called "calendar effects". More specifically, when distinguishing between the subperiods of pre- and post-intervention, data confirm that the "US presidential cycle" represents a process of high uncertainty and volatility in which the behavior of the prices of financial assets refutes the Efficient-Market Hypothesis.

Sustainable and conventional banking in Europe.

At the end of the 20th century a new banking model, the so-called ethical banking, emerged becoming the maximum exponent of a socially responsible investment. The financial crisis in 2008 led to a distrust of the conventional financial system and consequently investors began to look with interest this new banking, which only invests in ethical activities and products, with social and environmental criteria, total transparency and a democratic management. The aim of this article is to analyze the economic structure of ethical banking, compared to that of conventional banking, by paying attention to its liquidity, coverage and solvency. Specifically, We compare the financial statements of Triodos Bank, the main European ethical bank belonging to the Global Alliance for Banking on Values, with two of the main conventional banks of each of the five countries in Europe in which it operates. To do this, we apply a financial and economic analysis to the period from 2015 to 2018, the means difference test and analysis of variance on an array of financial ratios and, finally, probit regressions. The results reveal that ethical banking is growing more than conventional banking and it presents greater liquidity and solvency, although, in general terms, its profitability is not higher. In conclusion, both savers and investors have guarantees that their savings are invested not only in a responsible but also in a confident way in ethical banking.

A measure of inconsistencies in intertemporal choice.

The aim of this paper is to derive an index able to indicate if a discount function exhibits increasing or decreasing impatience, and, even, in the last case, whether the decreasing impatience is moderate or strong. Moreover, it will be shown that the sign of this indicator coincides with the sign of the convexity index of the discount function when only considering the cases of increasing and decreasing impatience. Consequently, this parameter supposes an improvement of Prelec's index of convexity. The main advantage of this novel measure is that, the same as Prelec's index, it uses the differential calculus and, moreover, can be easily plotted by showing the changes from a type of impatience to another one according to time.

A New Analysis on Self-Control in Intertemporal Choice and Mediterranean Dietary Pattern.

This paper completes Muñoz Torrecillas et al. (1) results and conclusions investigating the relationship between adherence to healthy dietary habits, specifically the Mediterranean Diet (hereinafter, MD), and impulsivity in intertemporal choices. Impulsivity can be defined as the strong preference for small immediate payoffs over larger delayed payoffs, and in the original study this behavior was captured by the parameter k (discount rate of the hyperbolic discount function), calculated using an automated scoring mechanism. Adherence to MD was measured by the KIDMED index and then grouped into three levels: high, medium, and low. While the authors observed that individuals in the high adherence group had the shallowest discounting and individuals in the low adherence group had the steepest discounting, the data were not statistically analyzed in depth. Therefore, the purpose of the present paper is to propose a preliminary quantitative model for this relationship and evaluate its significance. Tests revealed a significant interaction between adherence to MD and magnitude of delayed rewards when predicting discount rates. Specifically, the degree to which impulsivity decreases as adherence to MD increases is strongly influenced by delayed rewards of smaller magnitude. These findings are consistent with the authors' claims that healthy dietary habits may be closely linked with greater self-control when payoffs are small, and thus warrant further examination. The results do not indicate causality though, so future studies could also investigate the directions of this relationship as a means of developing behavioral interventions.

Economic situation, the key to understanding the links between CEOs' personal traits and the financial structure of large private companies.

Executives act based on their experiences, values, personality and personal interpretation of the situations which they face in their companies. Investigations in the field of Behavioral Corporate Finance have determined that there are some relations between CEOs' personal traits and financial decisions of large companies, but these results are based on indirect personal trait measurements and on public companies. To see whether such relations also exist between CEOs' personal traits and the financial structure of large private companies, we used psychometric tests to measure their level of optimism, risk attitude and affect heuristic, collected financial data for a period of fourteen years, and considered the economic situation of the country as a key factor in these relations. This paper reports the relationship of executives' personal traits with the financial structure of large Spanish companies for the period 2001-2014. We observed that executives' high optimism (and risk aversion attitude) is positively (negatively) related to long-term debt, whilst positive affect is directly associated to the financial leverage and short-term debt. This paper also reports a change of relations when taking into account the country's economic situation. In effect, by considering this new variable, executives' risk aversion is seen to be associated to financial leverage and short-term debt, whilst CEOs' positive affect is linked to long-term debt. These relations are strongly moderated and they become statistically significant in a contracting economic period. In conclusion, the links between CEOs' personal traits and financial structure of large private Spanish companies make sense when the effect of the economic situation is taken into account. Furthermore, the awareness of these links helps to understand the financial decisions taken within large Spanish companies.

A Causal Analysis of Life Expectancy at Birth. Evidence from Spain.

BACKGROUND: From a causal point of view, there exists a set of socioeconomic indicators concerning life expectancy. The objective of this paper is to determine the indicators which exhibit a relation of causality with life expectancy at birth. METHODS: Our analysis applies the Granger causality test, more specifically its version by Dumitrescu-Hurlin, starting from the information concerning life expectancy at birth and a set of socioeconomic variables corresponding to 17 Spanish regions, throughout the period 2006-2016. To do this, we used the panel data involving the information provided by the Spanish Ministry of Health, Consumer Affairs and Social Welfare (MHCSW) and the National Institute of Statistics (NIS). RESULTS: Per capita income, and the rate of hospital beds, medical staff and nurses Granger-cause the variable "life expectancy at birth", according to the Granger causality test applied to panel data (Dumitrescu-Hurlin's version). CONCLUSIONS: Life expectancy at birth has become one of the main indicators able to measure the performance of a country's health system. This analysis facilitates the identification of those factors which exhibit a unidirectional Granger-causality relationship with life expectancy at birth. Therefore, this paper provides useful information for the management of public health resources from the point of view of the maximization of social benefits.

A fuzzy approach for analysing equitable and sustainable well-being in Italian regions.

OBJECTIVES: Recently, the Italian Institute of Statistics (ISTAT) and the National Council for Economy and Labor (CNEL) have proposed a measure for the equitable and sustainable well-being called the BES ("Benessere Equo e Sostenibile"). This paper aims to propose an original application of the fuzzy k-means approach to providing an analysis of the Italian regions according to their BES. METHODS: The fuzzy k-means algorithm was used for clustering the Italian regions according to BES data 2015. Afterwards, a principal component analysis was conducted to show and interpret the results. RESULTS: There is a clear difference between the regions of the North and the South. The only exceptions are represented by Lazio and Abruzzo, which belong to both groups with almost equal degrees of truth. Moreover, Trentino-Alto Adige and Valle d'Aosta exhibit the best condition, whilst Molise is the worst region. CONCLUSIONS: This study reveals that some Italian regions are in a state of backwardness regarding health, environment, minimum economic conditions, subjective well-being, education, employment conditions, social relationships, and working conditions. Therefore, institutions should consider local policies to address these issues.

Loan transactions associated to continuous distributions of capital.

The objective of this paper is to design a loan repayment plan adapted to the financed company with the aim to avoid a possible situation of illiquidity. More specifically, in this paper the sequence of payments which amortizes a loan is determined according to the distribution of the future income expected by the borrower. To do this, we will start from the concept of a continuous distribution of capital or, equivalently, a continuous annuity. The continuous distribution of capital will be derived from a continuous distribution of probability, to then obtain a discrete annuity which fits the future income of the debtor. On the other hand, it is noteworthy the analysis of the particular case of financial transactions with interest periods of different amplitude, which can facilitate the adjustment of the sequence of instalments to the timing of the real income of the borrower in loan transactions.

Self-Control in Intertemporal Choice and Mediterranean Dietary Pattern.

Background: The Mediterranean Diet (hereinafter MD) is considered a healthy dietary pattern. Adherence to this pattern can be assessed by means of the KIDMED test by which individuals are assigned an index and classified into three groups of adherence to MD: high, medium, and low. In addition, impulsivity or impatience in intertemporal choice has been defined as a strong preference for small immediate rewards over large delayed ones. Objective: This study examines the relationship between dietary habits, specifically Mediterranean dietary pattern, measured by the KIDMED index, and the exhibited impatience in intertemporal choices, by means of the parameter k (discount rate of the hyperbolic discount function). Methods: A sample of 207 university students answered a questionnaire based on two tests: the KIDMED test, to assess the degree of adherence to MD, and an intertemporal choice questionnaire, to assess impatience or impulsivity. Individuals were grouped depending on their KIDMED score and then the discount rate or impulsivity parameter was calculated for each group. Results: Discount rates were inversely related to the degree of adherence to MD. The values of overall k were 1.53, 1.91, and 3.71% for the groups exhibiting high, medium and low adherence to MD, respectively. We also found higher k-values for larger rewards (magnitude effect) in the three groups. Conclusion: High adherence to MD is related to less steep time discounting, which implies less impulsivity (more self-control) or lower discount rates. Conversely, low adherence to MD is related to steeper time discounting, which implies impulsivity or higher discount rates. These findings could be used to identify the target population where policy interventions are needed in order to promote healthier diet habits.

Observed and Normative Discount Functions in Addiction and other Diseases.

The aim of this paper is to find a suitable discount function able to describe the progression of a certain addiction or disease under treatment as a discounting process. In effect, a certain indicator related to a disease decays over time in a manner which is mathematically similar to the way in which discounting has been modeled. We analyze the discount functions observed in experiments which study addictive and other problematic behaviors as well as some alternative hyperbola-like discount functions in order to fit the patience exhibited by the subject after receiving the treatment. Additionally, it has been experimentally found that people with addiction display high rates of discount (impatience) and preference reversals (dynamic inconsistency). This excessive discounting must be correctly modeled by a suitable discount function, otherwise, it can become a trans-disease process underlying addiction and other disorders. The (generalized) exponentiated hyperbolic discount function is proposed to describe the progression of a disease with respect to the treatment, since it maintains the property of inconsistency by exhibiting a decreasing discount rate after an initial period in which the opposite occurs.

Measuring Impatience in Intertemporal Choice.

In general terms, decreasing impatience means decreasing discount rates. This property has been usually referred to as hyperbolic discounting, although there are other discount functions which also exhibit decreasing discount rates. This paper focuses on the measurement of the impatience associated with a discount function with the aim of establishing a methodology to compare this characteristic for two different discount functions. In this way, first we define the patience associated with a discount function in an interval as its corresponding discount factor and consequently we deduce that the impatience at a given moment is the corresponding instantaneous discount rate. Second we compare the degree of impatience of discount functions belonging to the same or different families, by considering the cases in which the functions do or do not intersect.